Letting in Brighton
What Landlords need to know in 2021
The interesting thing about the world of property is that it is an ever-changing, ever-evolving product of modern-day society. Much like the famous British soaps, with their changing characters and complex story lines, property laws and government regulations take twists and turns too. Imagine the journey you take with a soap opera – fundamentally, if you miss an episode, you are going to be temporarily confused, however missing the latest regulation in letting could cost you financially and result in a major headache.
Allow this blog to fill in the blanks and keep you in the know-how of the property market today. By the time you’ve finished reading this, you’ll be much more informed and up to date with latest thinking on the essentials, including market trends, rent arrears, compliance laws, and finally, what to watch out for in order to become a hassle-free and financially successful Landlord.
Letting – Is there a new normal?
Without opinion the world would be quite dull. Whether we are discussing house prices, the weather, the pros and cons of Brexit, sport or more recently how well the government has performed regarding the Pandemic, we cannot escape this heavily opinionated environment. However, when it comes to facts, having an opinion doesn’t stand up to much…because they are facts!
We hear talk of a ‘new normal’ in the post pandemic world which may happen, but it is a fact that a sizable chunk of the population will be working from home in a new hybrid working arrangement. This has been communicated recently by large UK corporations who are reducing their commercial space to facilitate less people, therefore promoting a work at home environment. Having said that, this model cannot be applied to all demographics, letting agencies included.
There are many funny clips on social media linked to zoom meetings with pets and young kids walking in unexpectantly, but there will be vastly more cases not shown of frustrated workers trying to respond to an email in a noisy kitchen. So, will that drive new direction in what people are looking at with regard to their next property? Will that mean prospective tenants will replace the need for off street parking with the need for a small office? Do I want a secluded garden room where I can work quietly and uninterrupted….possibly.
We know commuting to work isn’t great for work life balance and certainly not good for the environment, not to mention the expense. Likely, many job hunters will be adding hybrid working into the ‘must haves’ when looking for their next career move. Consequently, we can suspect a change in the size and type of home we want to live in, along with the ideal location and services that allows workers the advantage of commuting efficiently if crucial.
Speaking from the perspective of a famed beach side city, it’s possible to draw parallels between such occurrences and trends we’ve seen regarding our properties and the tenants who reside in them. Parks has seen an upturn in London professionals relocating with a desire of some form of outdoor space, close proximity to one of the mainline stations and a home which is able to facilitate an office. Especially in London, many city professionals are used to residing in modern buildings with contemporary fixtures and fittings. Our experience is that these applicants are happy to pay to higher value of rent but are seeking a higher specification (such as the home office, or proximity to mainline stations).
Is this trend likely to change anytime soon? Was anyone anticipating the rise of a worldwide epidemic?…certainly not. Who knows what worldly catastrophe will come next to create shock waves on the property world, all we know is that here at Parks, we are waiting in anticipation to find out.
How YOU can become a hassled-free landlord
Being a ‘Landlord’ is mostly a decision made for investment reasons to diversify ones portfolio, yet not forgetting also can be derived accidently from inheritance, relationships where both partners have property, or even buying a temporary home for a child’s University term.
However, what most Landlords have in common is that any ‘hassle’ is either non-existent or at the very least minimal and is managed with minimal costs therefore maximising the return of their investment. Taking reference from the areas of property management mentioned above, there is also the element of maintenance and tenant associated expectations. While some may enjoy the challenge, others may prefer the support of a letting agency to help guide them through the process.
The advantage of letting agencies is that they offer Landlords the opportunity to unload unfavourable tasks onto expert professionals catered to dealing specifically within the world of property. Companies as such handle compliance demands, documentation, maintenance, referencing duties, and challenging tenant situations on the Landlords behalf. With that said, there are many Landlords who prefer not to use a letting agency to manage their property and opt for ‘tenant find only’ option thus acting as self-managing, although often Landlords can find this a time-consuming process. It’s key to note all property requires a level of upkeep and maintenance, so it is prudent to have access to a trusted electrician, plumber and handy man, that can be called on at short notice to resolve issues that could escalate quickly.
Self-managed Landlords should not underestimate the stress caused to both Landlord and tenant when a boiler malfunctions in the middle of the night, which can be both costly and consequently quickly erode relationships. At Parks, we can provide advice on these pitfalls and guide accordingly resulting in many years of hassle-free renting. If you are a self-managed Landlord, thinking of using/switching letting agencies, or want a free valuation of your property, contact firstname.lastname@example.org.
One of the most important areas of letting surrounds the unfortunate reality of rental arrears. A common concern for Landlords or prospective Landlords is this very potential threat.
Quite simply, these occur when tenants fall behind or just do not pay their rent. There are various reasons as to why this may occur; maybe the tenant is having trouble with their bank or has accidentally cancelled their standing order. Other more serious circumstances may include difficult life changes such as redundancy, or a turbulent dispute between tenant and Landlord. Either way, this can be very damaging for Landlords as, contrary to common belief, many Landlords depend heavily on these payments as a sole source of income, or to cover the existing mortgage on the property.
“How can I be protected from rental arrears?” Well, if you are a Landlord whose property is being managed via a letting agency, they will often have processes set in place to ensure the tenants have been thoroughly referenced. Taking example from the procedure at Parks, prospective tenants cannot move into the property until coordinators have successfully collected:
- Identification (passport / drivers licence / adhere to right to rent checks)
- University/employer reference (confirming course/job title and length of study/time in role)
- Previous Landlord reference (confirming rent was always paid on time)
- Character reference (someone who can vouch that you are genuine and reliable)
- Proof of current address (to confirm your information is truthful and accurate)
- Credit search
- Right to rent check
Circumstances in which prospective tenants are new to their employment, work less than 35 hours per week, and/or are studying must provide a guarantor. At Parks, our Guarantors own a property within England and Wales which is their primary residency, and they meet our income requirements. As evidence of this, they need to provide:
- Identification (passport / drivers’ licence)
- Employer reference
- Proof of residence at their property
- Proof of ownership of their property
- And pass a credit check
As a result of such a strict and rigorous referencing process, Parks Letting proudly have an amazingly low rent arrears, with a figure as low as 0.08% of the total rent we collect.
Additionally, some agencies, Parks included, offer Landlords the option to purchase a rent and legal insurance policy. Typically, this policy gives landlords complete peace of mind to protect their income and possession should it need to be called upon.
Let’s talk about compliance laws.
As the title suggests, this element of property management and Landlord associated duties is paramount to keep up to speed with and relevant. Health and safety is the most important thing to consider with regards to tenants residing in your property, and consequently, by law there are key mandatory safety requirements you must adhere to. Bear in mind, the following initial four requirements could lead to Landlords or letting agencies being criminally prosecuted if not correctly addressed. As of April 2021, these requirements stand as follows;
First and foremost, ‘The Gas Safety Certificate’ (GSC). If your property has any gas appliances or installations, they must be checked every 12 months by a Gas Safe Registered engineer and a certificate will be supplied listing they are ‘safe to use’ and comply with the gas safety (installations and use) regulations of 1998 (amendment made in 2018). Costs tend to range dependent on what engineer you choose to carry out the inspection.
Next, there’s ‘The Electrical Installation Condition Report’ (EICR). As of the 1st April 2021, all tenancies throughout England and Wales will require a EICR whereby a qualified electrician will undertake an inspection and report of the property. The certificate lasts up to 5 years and must show a ‘satisfactory’ result with no C1 or C2 danger codes. These costs vary upon the size of your property and number of electrical appliances it holds.
Right to rent checks. Landlords or agencies must ensure tenants have the right to rent a property within England and Wales. This face-to-face check is a quick process in which the tenant’s passport can be viewed in the flesh, and the Landlord/agent is able to certify that they have seen the original document. Currently, under emergency covid guidelines, you are also able to do a virtual right to rent check where the tenants can be seen via video, however, this is soon to be phased out.
It is important to bear in mind that there are additional laws regarding your property when letting to multiple tenants at one time: ‘Houses in Multiple Occupation’ (HMO). Often the case with letting your property to students, where there’s three or more sharers, and the living accommodation is over more than one floor or above a commercial (shop/café/restaurant etc), a HMO license is mandatory. These are issued by the local authority and may be subject to planning permission via article four which is now city wide.
Smoke and Carbon Monoxide Alarms – obviously! The law states a working smoke alarm must be fitted on each storey. Carbon monoxide alarms must be installed where solid fuel is burnt, and at Parks, we also recommend that they are installed regardless, especially when there’s a boiler in a bedroom as tenant safety is paramount.
Moving on, it is key to note that any upholstered furnishings containing foams must, by law, be supplied with a Furniture Fire Safety Tag or have proof of purchase from the manufacturer that they comply with the 1993 amendments of the original fire safety laws passed in 1988.
‘The Energy Performance Certificate’ (EPC). This certificate lasts for ten years and assesses how efficiently a property uses energy. All rented properties require a minimum energy performance rating of E or above. The cost of an EPC will differ depending on the size, location and how recently your property has been built. If you want to check if your property has an EPC, you can do so via the following link; Find an energy certificate – Find an energy certificate – GOV.UK (communities.gov.uk).
Finally, we have one more to go! Welcome to ‘Non-Resident Landlord Tax’; this applies only to Landlords who reside overseas for more than 182 days a year (i.e. 6 months). This form surrounds tax deductions and must only be completed by the Landlord themself and submitted to HMRC. NRL1 forms are for Landlords who want to receive their rent without any tax reductions being made by the tenants or the letting agents.
Parks are here for you!
Landlords, prospective Landlords or even those simply interested in the unpredictable nature of property – you are encouraged to use this blog as a reference tool for compliance requirements, trends and what to be aware of when renting out your property. For queries, valuations or professional advice, contact Parks Lettings on 01273 202089.